Tech Tour Mobility Summit 2019: Investment in European mobility companies is accelerating in 2019

Silverpeak were delighted to sponsor the inaugural Tech Tour Mobility Summit 2019 in Munich last week.

With 70+investors and corporates and 30 pre-selected Scale-ups in six Mobility tech tracks, the event enabled attendees to deep dive into the future of Mobility.

Pietro Strada, Silverpeak Managing Partner, spoke on the financing environment for growth capital (B and C rounds) where data shows that the investment in European mobility companies is accelerating in 2019 in terms of both number of deals and invested amount.

Silverpeak_The State of the Market for Series B & C Rounds in European Tech Companies_November 2019

“There are many different players who want to be at the forefront of mobility the sector: some are entirely new entrants, some have to complement their traditional revenues as they come under threat. We expect to see significant investment activity and consolidation over the next few years” said Pietro, “We know this space very well having recently advised Oxbotica, the autonomous vehicle software company, and Ticketer, the public bus ticketing and fleet management company.”

David Ford, Director, who moderated the ‘Smart Mobility’ session, said, “The urban transport sector is on the cusp of great change, thanks to a confluence of new technologies. From self-driving cars, to Mobility-as-a-Service (MaaS), to shared mobility and convenience apps – the potential is truly extraordinary.”

Last month Silverpeak updated its research report “The Future of Urban Transport”.

Autonomous vehicles, shared mobility, and Mobility as a Service – the future of the urban transport market is already here.

 

Autonomous vehicles, shared mobility, and Mobility as a Service – the future of the urban transport market is already here.

The urban transport sector is on the cusp of great change, thanks to a confluence of new technologies. From self-driving cars, to Mobility-as-a-Service (MaaS), to shared mobility and convenience apps – the potential is truly extraordinary.

“MaaS is the concept of being able to use mobility tools to buy a number of different trips on a variety of transport modes, but in one place,” says Pietro Strada, managing partner at Silverpeak. “You could leave home in a taxi, then jump on a tube, take a train then finish your journey with another taxi. That’s four separate trips, in four different vehicles, which you pay for four different times”.

“But with MaaS, you would simply pay once for the entire journey.”

With this technology starting to get deployed in major cities, there is a very clear need for more investment, innovation and regulation in the urban transport market.

The world is becoming increasingly urbanised. In 1970, just 30 per cent of the population lived in urban areas. This figure had risen to 54 per cent by 2014, and the UN estimates that a massive 66 per cent of the world’s population will live in cities and urbanised areas by 2050.

Meanwhile, concerns around air pollution are growing, emphasising the need for clean technology in densely populated areas. According to the World Health Organisation, 90 per cent of people living in cities are not breathing clean air, and we know that transportation emissions are responsible for more than a quarter of all greenhouse gases.

We are also more connected now than ever before, thanks largely to the advent of affordable mobile technology. There are five billion mobile phone users in the world today – that’s 68 per cent of the total population. By 2023, it has been predicted that one billion of these mobile users will have a 5G subscription, which would allow them to connect to the internet anytime, anywhere.

As a result of these developments, the urban transport market is primed for disruption. This could come in many different forms, from MaaS; to the advent of autonomous driving; to the wide adoption of shared mobility services.

Silverpeak has analysed data on financings and acquisitions in this market, and it has concluded that the next few years will see a sustained level of investments and M&A activity.

1. Mobility as a Service (MaaS)

At its core, MaaS is a mobility distribution model which brings together multiple services in one place, allowing the user to streamline their journeys by planning and booking trips via a single platform.

Across Europe, a number of integrated mobility services are being rolled out, from UbiGo in Sweden, to Qixxit in Germany, and Whim in Finland. Also, car manufacturer Daimler has gotten in on the act, with its Moovel ride-booking service, which is currently being tested in the U.S. and Europe.

There is still some way to go before MaaS becomes mainstream, but the early signs are promising.

“We’ve done a number of deals in different areas of what we are now calling the mobility sector,” says David Ford, director at Silverpeak. “It’s relatively new right now but we think there’s a lot more activity that’s going to go on.”

Transit information providers have raised hundreds of millions of dollars in investment over the past ten years, underlining the enormous value embedded in these services. Germany’s GoEuro, for instance, has raised $296m since it was founded in 2012. It provides a multi-modal search tool that compares and combines rail, car, bus, train and aeroplane routes and prices

In some cases, transit information providers have already started to take the first steps towards becoming fully-fledged MaaS providers. Public transport tracking app CityMapper is using the travel data it gathers from millions of user-planned journeys to run an on-demand, shared rides service in city areas that the data has shown to be underserved by existing transport links.

While these developments are still very much in their infancy, there is a clear first-mover advantage to be won, both in the UK and across Europe.

“There is a lot of activity in the MaaS space,” says Matteo Pozzi, director at Silverpeak. “Many companies are raising significant capital to position for the dramatic anticipated growth in revenues.”

2. Autonomous vehicles

Mass-market self-driving cars have yet to become a reality, but some huge strides have been made in the area of autonomous vehicles.

At Oxbotica – an Oxford University-based firm which is run by professors from the Oxford Robotics Institute – self-driving software is already being used in cars, trucks, forklifts, pods, shuttles, mining and construction vehicles.

“Their technology is amazing – world class,” says Paddy MccGwire, managing partner at Silverpeak. “Last year, they were approached by a huge international car company and another tier one supplier, but they found that these deals would never get to completion. They realised they needed somebody to help them get from A to B, so we started to work with them in March 2018, and five months later we completed a £14m funding round.”

Since then, Silverpeak have helped them raise another round in July 2019, which will be used to accelerate Oxbotica’s growth plans in the coming years. And while we are still a few years away from self-driving commutes, MccGwire points out that on private turf such as airports or docks, this technology can be rolled out far more quickly.

“For instance, one airport found that they could cut the number of vehicles air-side by a third if they were autonomous,” says MccGwire. “And that’s everything from the bus to bring people to baggage handling, to the tug that pushes aeroplanes. So, it’s exciting and there are quite a lot of different benefits for what vehicle automation can do.”

3. Shared mobility

Ride-hailing apps already take up plenty of space on the average smartphone, and the shared mobility market is only just getting started.

Since the Uber and Lyft IPOs, in the ride-hailing sector alone, nearly $70bn (£57bn) has been raised between the top 4 companies: the American players Uber and Lyft as well as their Asian rivals Didi and Grab. Meanwhile, established brands such as GM and Toyota have begun investing in new car-sharing technologies from the likes of Turo and Getaround, with a view to expanding their business model to become service providers as well as vehicle manufacturers.

According to Silverpeak’s research, 2019 investments in ride-hailing, car sharing, and carpooling services rose to an all-time high of $21.7bn. These figures reflect a demographic shift in how transport is viewed in urban areas.

“Millennials in particular live more in cities and buy fewer vehicles,” explains Strada. “They are more likely to rent a vehicle, use a rideshare scheme or take public transport and that’s threatening the business model of the automotive OEMs.”

In fact, in preparation for the “death of car ownership”, BMW and Daimler have pooled their mobility assets into five new joint ventures (now three) to give them additional scale and create vertical mobility powerhouses focused on urban areas.

Scooter sharing and bike sharing schemes have also been gaining traction in the investment community lately. Over the last five years, approximately $9.4bn has been invested into bike and scooter sharing or rental schemes. China is very much in the lead on this trend, with the top three Chinese players raising a significant proportion of the combined fundraising in the market.

Uber, Didi and Lyft have already acquired some of the most promising bike-sharing and scooter-sharing innovators, in a clear indication that urban transport is going green. However, without regulation, this has led to unfavourable unit economics due to a large proportion of bikes and scooters getting damaged, resulting in players such as Ofo verging on bankruptcy.

“Car ownership in urban areas is going to die sooner than outside of urban areas where people need their own vehicles,” adds Strada. “We’re still tens of years away, but once the trend becomes mainstream it’s obviously too late to take a position. You want to be prepared and starting much earlier than that.”

“There are a lot of different players who want to get into the mobility sector for a lot of different reasons and hence, there’s likely to be a lot of consolidation and activity in this space.”

Chinese market dynamics and the future of urban transport

China is a market that is experiencing its own dynamics and in some areas is leading. As well as taking the lead on bike-sharing and scooter-sharing innovation, China is poised to become a global leader in the autonomous car market. Since 2015, China has spent at least $24bn more than the US on 5G technology – an essential component for autonomous vehicle manufacturing. Both Alibaba and Baidu are in the advanced stages of testing self-driving cars, and Alibaba is even looking into the creation of ‘smart roads’ which feed data to cars as they travel.

“China is investing in a lot of AI at the moment,” says Strada. “But there is not a lot of transparency in China. It’s hard to discern what is being done for political purposes and what is being done for economic value.”

Having said this, Strada believes that everyone can learn from China’s commitment to innovation in the urban transport space. And one thing is certain – the urban transport landscape is changing fast.

“We expect that over the next five to ten years, there is going to be sustained activity in investment acquisition in the automotive sector where the traditional players will either have to team up with technology companies that provide a piece of the new infrastructure or they will face competition from new entrants who have completely different business models,” says Strada.

“There is so much change happening in this growing area. Players cannot afford to stand still.”

Tech Tour Deep Tech Summit 2019: Fundraising booming to record highs

Silverpeak were delighted to sponsor the Tech Tour Deep Tech Summit in London, which saw the convergence of 150+ participants including corporates, fund investors, investment bankers, thought-leaders and over 35 CEOs/Founders.

This year’s Summit covered a range of breakthrough technologies including autonomous systems, robotics, AI, IoT, cyber-security, big-data, blockchain, 3D printing, space, hardware and electronics, and other IP-driven solutions enabling digital transformation across multiple industries.

Paddy MccGwire, Managing Partner, Silverpeak gave a keynote to investors  on “The Deep Tech Investment Landscape.”

20191015_DeepTech_Summit_FINAL

Pietro Strada, Managing Partner, Silverpeak and Shawn Atkinson, Partner, Orrick, spoke at the CEO workshops on “Later Stage Fundraising and Deal-Making for Deep-Tech Companies.”

US EBITDA multiples reach record highs but revenue multiples down across the board

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • US SaaS revenue multiples have been peaking since March 2019 but are showing signs of a potential downturn occurring in Q4 2019, supported by their 7% drop in multiples since Q2. However, their median EBITDA margin has been outperforming the other categories, rising 1.4% versus their average 2% decline.
  • US Horizontal revenue multiples took a nose dive, falling 11% from last quarter; effectively ending the period, from Q3 2018, in which it was consistently above US Vertical.
  • UK Small & Mid revenue multiples have been stagnant since 2015 and their EBITDA multiples have been slowly falling; not recovering from their 7x plunge in Q4 2018.
  • European companies did not experience a decline themselves, instead growing 0.6%, despite the bear-ish market, where there was an average fall of 7% in revenue multiples across the other 4 categories.

Silverpeak Benchmark Report Q3_2019

US SaaS multiples blast previous high out of the water

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • US SaaS median revenue multiples have continued to rise, surpassing their previous quarter end, 8.2x, by 7%; whilst also reaching an all time high of 9.4x during the quarter
  • UK Small & Mid median revenue multiples were recovering, closing 6.7% higher than the previous quarter; however, they are still 10% lower than the same quarter last year (3.9x)
  • European companies continue to have the lowest valuations, with no sign of this trend changing any time soon

Silverpeak Benchmark Report Q2_2019_Final

US SaaS multiples skyrocket while growth forecasts fall

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • US SaaS median revenue multiple rocketed by 49.5% QOQ to 8.2x, reaching the previous peak. In the meantime, its revenue growth expectation declined by 6.5% QOQ to 18.9%
  • US Horizontal and US Vertical revenue multiples followed the trend of US SaaS TEV/Sales and increased by 23.9% and 18.1% QOQ respectively
  • UK Small & Mid diverged further from US multiples, having closed the gap in 2018.
  • European companies, who continue to have the lowest valuations, were the only category that experienced a drop in TEV/Sales QOQ, from
    2.0x (Q4’18) to 1.9x (Q1’19)

Silverpeak Benchmark Report Q1_2019

Autonomous vehicles, shared mobility, and Mobility as a Service – the future of the urban transport market is already here.

The urban transport sector is on the cusp of great change, thanks to a confluence of new technologies. From self-driving cars, to Mobility-as-a-Service (MaaS), to shared mobility and convenience apps – the potential is truly extraordinary.

“MaaS is the concept of being able to use mobility tools to buy a number of different trips on a variety of transport modes, but in one place,” says Pietro Strada, managing partner at Silverpeak. “You could leave home in a taxi, then jump on a tube, take a train then finish your journey with another taxi. That’s four separate trips, in four different vehicles, which you pay for four different times”.
“But with MaaS, you would simply pay once for the entire journey.”

While this technology is still some way away, there is a very clear need for more investment and innovation in the urban transport market.

The world is becoming increasingly urbanised. In 1970, just 30 per cent of the population lived in urban areas. This figure had risen to 54 per cent by 2014, and the UN estimates that a massive 66 per cent of the world’s population will live in cities and urbanised areas by 2050.

Meanwhile, concerns around air pollution are growing, emphasising the need for clean technology in densely populated areas. According to the World Health Organisation, 90 per cent of people living in cities are not breathing clean air, and we know that transportation emissions are responsible for more than a quarter of all greenhouse gases.

We are also more connected now than ever before, thanks largely to the advent of affordable mobile technology. There are five billion mobile phone users in the world today – that’s 68 per cent of the total population. By 2023, it has been predicted that one billion of these mobile users will have a 5G subscription, which would allow them to connect to the internet anytime, anywhere.

As a result of these developments, the urban transport market is primed for disruption. This could come in many different forms, from MaaS; to the advent of autonomous driving; to the wide adoption of shared mobility services.

Silverpeak has analysed data on financings and acquisitions in this market, and it has concluded that the next few years will see a sustained level of investments and M&A activity.

1. Mobility as a Service (MaaS)

At its core, MaaS is a mobility distribution model which brings together multiple services in one place, allowing the user to streamline their journeys by planning and booking trips via a single platform.

Across Europe, a number of integrated mobility services are being rolled out, from UbiGo in Sweden, to Qixxit in Germany, and whim in Finland. Also, car manufacturer Daimler has gotten in on the act, with its Moovel ride-booking service, which is currently being tested in the U.S. and Europe.

There is still some way to go before MaaS becomes mainstream, but the early signs are promising.

“We’ve done a number of deals in different areas of what we are now calling the mobility sector,” says David Ford, director at Silverpeak. “It’s relatively new right now but we think there’s a lot more activity that’s going to go on.”

Transit information providers have raised hundreds of millions of dollars in investment over the past ten years, underlining the enormous value embedded in these services. Germany’s GoEuro, for instance, has raised $296m since it was founded in 2012. It provides a multi-modal search tool that compares and combines rail, car, bus, train and aeroplane routes and prices.

In some cases, transit information providers have already started to take the first steps towards becoming fully-fledged MaaS providers. Public transport tracking app CityMapper is using the travel data it gathers from millions of user-planned journeys to run an on-demand, shared rides service in city areas that the data has shown to be underserved by existing transport links.

While these developments are still very much in their infancy, there is a clear first-mover advantage to be won, both in the UK and across Europe.

“There is a lot of activity in the MaaS space,” says Matteo Pozzi, director at Silverpeak. “Many companies are raising significant capital to position for the dramatic anticipated growth in revenues. However, it is still early days for this sector – it is still nascent.”

2. Autonomous vehicles

Mass-market self-driving cars have yet to become a reality, but some huge strides have been made in the area of autonomous vehicles.

At Oxbotica – an Oxford University-based firm which is run by professors from the Oxford Robotics Institute – self-driving software is already being used in cars, trucks, forklifts, pods, shuttles, mining and construction vehicles.

“Their technology is amazing – world class,” says Paddy MccGwire, managing partner at Silverpeak. “Last year, they were approached by a huge international car company and another tier one supplier, but they found that these deals would never get to completion. They realised they needed somebody to help them get from A to B, so we started to work with them in March, and five months later we completed a £14m funding round.”

That funding will be used to accelerate Oxbotica’s growth plans in the coming years. And while we are still a few years away from self-driving commutes, MccGwire points out that on private turf such as airports or docks, this technology can be rolled out far more quickly.

“For instance, one airport found that they could cut the number of vehicles air-side by a third if they were autonomous,” says MccGwire. “And that’s everything from the bus to bring people to baggage handling, to the tug that pushes aeroplanes. So, it’s exciting and there are quite a lot of different benefits for what vehicle automation can do.”

3. Shared mobility

Ride-hailing apps already take up plenty of space on the average smartphone, and the shared mobility market is only just getting started.

In the ride-hailing sector alone, more than $45bn (£34.5bn) has been raised through just two companies: the ubiquitous Uber and China’s rival firm Didi. Meanwhile, established brands such as GM and Toyota have begun investing in new car-sharing technologies from the likes of Turo and Getaround, with a view to expanding their business model to become service providers as well as vehicle manufacturers.

According to Silverpeak’s research, in 2018 investments in ride-hailing, car sharing and carpooling services rose to an all-time high of $20.6bn. These figures reflect a demographic shift in how transport is viewed in urban areas.

“Millennials in particular live more in cities and buy fewer vehicles,” explains Strada. “They are more likely to rent a vehicle, use a rideshare scheme or take public transport and that’s threatening the business model of the automotive OEMs.”

In fact, in preparation for the “death of car ownership”, BMW and Daimler have pooled their mobility assets into five new joint ventures to give them additional scale and create vertical mobility powerhouses focused on urban areas.

Scooter sharing and bike sharing schemes have also been gaining traction in the investment community lately. Over the last five years, approximately $7.6bn has been invested into bike and scooter sharing or rental schemes – and 90 per cent of this was raised in 2017 and 2018 alone. China is very much in the lead on this trend, with the top three Chinese players raising 70 per cent of the combined fundraising in the market.

Uber, Didi and Lyft have already acquired some of the most promising bike-sharing and scooter-sharing innovators, in a clear indication that urban transport is going green.

“Car ownership in urban areas is going to die sooner than outside of urban areas where people need their own vehicles,” adds Strada. “We’re still tens of years away, but once the trend becomes mainstream it’s obviously too late to take a position. You want to be prepared and starting much earlier than that.”

“There are a lot of different players who want to get into the mobility sector for a lot of different reasons and hence, there’s likely to be a lot of consolidation and activity in this space.”

Chinese market dynamics and the future of urban transport

China is a market that is experiencing its own dynamics and in some areas is leading. As well as taking the lead on bike-sharing and scooter-sharing innovation, China is poised to become a global leader in the autonomous car market. Since 2015, China has spent $24bn more than the US on 5G technology – an essential component for autonomous vehicle manufacturing. Both Alibaba and Baidu are in the advanced stages of testing self-driving cars, and Alibaba is even looking into the creation of ‘smart roads’ which feed data to cars as they travel.

“China is investing in a lot of AI at the moment,” says Strada. “But there is not a lot of transparency in China. It’s hard to discern what is being done for political purposes and what is being done for economic value.”

Having said this, Strada believes that everyone can learn from China’s commitment to innovation in the urban transport space. And one thing is certain – the urban transport landscape is changing fast.

“We expect that over the next five to ten years, there is going to be sustained activity in investment acquisition in the automotive sector where the traditional players will either have to team up with technology companies that provide a piece of the new infrastructure or they will face competition from new entrants who have completely different business models,” says Strada.

“There is so much change happening in this growing area. Players cannot afford to stand still.”

B2B Software Leadership Dinner: Software leaders call for greater alignment as sector grows – 6 February 2019

There is significant capital for growth-stage business-to-business (B2B) SaaS and software companies, but early-stage fundraising is more challenging; subscription is the preferred revenue model, but perpetual licenses are still used in certain settings; “SaaS businesses” can differ in revenue models, delivery models, payment terms depending on their geographical and vertical reference market.

These were the conclusions drawn from the latest B2B Software Leadership Dinner in London.

The dinner took place on Wednesday 6 February and featured 20 senior executive and board members from the software and Software-as-a-Service (SaaS) sector. It was hosted by Silverpeak, the technology investment bank, Spectrum, the retained executive search and HR consulting firm for the technology sector, and technology law firm Wiggin.

“It was a wonderful dinner with the participation of 20 great executives & directors,” said Pietro Strada, Managing Partner at Silverpeak. “I think it demonstrates the quality and maturity of the software and SaaS sectors in Europe: it is clearly a very healthy and strong market.”

While the evening took place under Chatham House rules, some key points of discussion have been released.

Attendees agreed that while there is significant capital available for growth-stage B2B software companies, it was generally considered to be more difficult to secure early stage fundraising.

Furthermore, there are some major national and sectoral differences with regards to the adoption of SaaS vs. perpetual licenses, and in some cases, SaaS can represent different things to different people.

For some, it is closely affiliated with a company’s revenue model (subscription) or payment terms (annually/quarterly/monthly in advance), while for others it is about delivery (multi-tenant single-instance) and cloud hosting. For companies in certain sectors, e.g. financial services, SaaS may raise concerns about data capture and storage costs connected with these software services.

Given these various points of differentiation, the business leaders present at the dinner agreed that more needs to be done to communicate the characteristics and benefits of SaaS.

Ultimately the key success metric for B2B SaaS companies is customer adoption and utilisation, which requires the key implementation departments in the company to be aligned. It also requires SaaS providers to follow good business disciplines, such as understanding their clients’ needs and having a product that addresses them.

The group also agreed that whilst there are some common key performance indicators (KPIs) of SaaS companies, such as LTV or CAC or churn, the way in which they are calculated can vary. Senior managers should able to calculate them and present them into the context of their own businesses.

Silverpeak director David Bell revealed that some lively discussions took place among attendees, which is further evidence of the dynamic nature of the sector.

“We had a wide ranging-discussion, touching on the commercial, operational and financial insights of and challenges for B2B software businesses in diverse verticals and differing stages of maturity,” said Bell. “And somewhat surprisingly there were even some impromptu contractual negotiations taking place in the room.”

Q4 multiples correction across the application software sector

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Silverpeak Benchmark Report Q4_2018_final_v2

 

UK Small & Mid revenue growth forecast +35% QOQ

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

 Silverpeak Benchmark Report Q3_2018